Chairman Michael Selig said the contracts were deemed approved under Regulation 40.3, naming no exchange, no stock and no start date. Hours later the Capital Markets Alliance asked a Manhattan federal court to vacate the approvals and bar the agency from giving them effect.
The Commodity Futures Trading Commission has cleared perpetual futures on individual US stocks to trade on registered American exchanges for the first time, and within hours a trade association had asked a federal court to undo the decision. Chairman Michael Selig announced the clearance on November 3. The Capital Markets Alliance said it filed its challenge the same day.
The contracts were deemed approved under Commission Regulation 40.3, which treats them as security futures products under the Commodity Futures Modernization Act of 2000 and leaves them under the joint oversight of the CFTC and the Securities and Exchange Commission. Deemed approval is not an affirmative vote. A product clears when its review period ends without a notice of non-approval, a window crypto.news reported runs 45 days with provision for extension. Unchained reported that neither Selig's statement nor the agency's press release refers to a Commission order, the route the CFTC used when it cleared Kalshi's bitcoin perpetual in May.
What the statement left out matters as much as what it contained. CoinDesk reported that Selig named no exchange and no stocks available at launch and gave no start date, and Unchained reported that the statement did not say whether the proposed rule changes already pending from KalshiEX, Coinbase Derivatives and Bitnomial are the contracts now deemed approved. The clearance leaves the same gap the SEC's October order for six leveraged commodity funds left, where the exchange could list them and they could not trade until their registration statements were declared effective.
Selig framed the decision as repatriating activity that already exists. American investors and traders would be able to use the contracts for risk management and price discovery inside the CFTC's framework “rather than being forced to turn to offshore, and often unregulated, venues,” he said in the statement, in wording reported in identical terms by CoinDesk and Unchained.
The Capital Markets Alliance, a New York trade association that describes its members as exchanges, market makers, broker-dealers, investors and data providers, said it had filed suit in the US District Court for the Southern District of New York. The complaint asks the court to vacate the approvals, to declare that the products are security-based swaps, and to bar the CFTC from giving the approvals effect while the case is pending.
Its argument runs through the Administrative Procedure Act. Security-based swaps sit under the SEC's exclusive jurisdiction, the association says, and it contends the CFTC offered no explanation for the approvals and did not acknowledge that it has long treated perpetual derivatives as swaps. It also says the agency failed to weigh the effects on investors and securities markets. “The hasty roll out of financial products that circumvent well-established regulatory frameworks erodes investor protection,” said Adam Ford, the alliance's secretary. These are allegations in a complaint, and no court has ruled on them.
The classification argument is not new, and the CFTC is already defending it. CME's exchange subsidiary sued the agency in June under the same statute over the May order and policy statement that opened the door to perpetual futures on digital assets, arguing that a contract with no expiration date is a swap rather than a future. That case is before Judge Colleen Kollar-Kotelly in the US District Court for the District of Columbia, where the CFTC has moved to dismiss on the ground that CME cannot show harm. The alliance's complaint presses the same classification point and pushes it further, asking a court to place contracts on single stocks under the SEC as security-based swaps.
Cboe Global Markets joined the action and set out its position in its own release, which describes a request for injunctive relief and argues that “these securities products belong on registered securities platforms.” Craig Donohue, the exchange operator's chief executive, said Cboe “has joined this action alongside some of the largest U.S. market participants and investor advocates.” The release names Citadel Securities and the Healthy Markets Association among the alliance's members. Cboe had already written to the SEC on October 14, crypto.news reported, asking it to abrogate the pending proposals and require them to be refiled.
Index perpetuals reached US exchanges first, by the same route. CFTC staff told futures exchanges in October that it would not recommend enforcement against one that removed the expiration dates from broad-based security index futures it already listed, and that letter recorded a KalshiEX broad-based index perpetual deemed approved on October 2. Kalshi listed a perpetual future on an index of 500 large US companies the same week, while its separate filings for contracts on single stocks were not trading.
Hyperliquid's policy arm filed a comment letter with both agencies in August arguing that cash-settled perpetual contracts should be classified by their economic structure rather than by the asset they reference, which would place contracts on single stocks in the same category as bitcoin perpetuals. The CFTC has now placed them there, and the alliance is asking a court to move them to the SEC's side of the line.
Perpetual futures traded more than $630 billion over the past month, CoinDesk reported, citing DeFiLlama. For now the clearance sits on paper: no exchange has said when a single-stock contract will list, and a federal court has been asked to suspend the approvals before the first one trades.
